Placester Raises Dough, Takes Aim at Zillow and Trulia

My friend Seth Price, aka, Best Dressed Man in Real Estate, works for a startup called Placester. Many of you know the company, as it makes IDX websites for brokers and agents. High quality design templates and custom websites is Placester’s game. Or rather it was Placester’s game.

This morning, Placester announced that it had raised an additional $5.5M in funding. That news by itself isn’t something I’d normally write about, but there is an interesting angle here.

Boston, MA – April 22, 2014 – Placester, the real estate advertising network, today announced a $5.5M Series A financing round led by Romulus Capital, which also led the company’s seed round, with additional participation from existing investors Dave Anderson (Kiva, Silverpop), Josh Summers (Clypd, Where.com), David Cohen (Founder of Techstars), Adam Berrey (Curoverse, Brightcove, Allaire) and Angel Street Capital. With this round, Placester also announced a new product for local media companies with a nationwide deal with Hearst Corporation. The end-to-end, white-labeled consumer real estate portal combines listing data, powerful free-text search technology and a native advertising platform designed for the needs of the industry.

Together with its website product for real estate agents, Placester is realizing its long-term vision of connecting local publishers to the world’s real estate professionals. These publishers have long been out of reach to most real estate professionals due to market fragmentation and antiquated advertising choices. For publishers, this represents a fresh opportunity to garner more of the enormous digital advertising investment made each year by real estate professionals, estimated to reach $14.5B by 2017.

“Real estate is one of the largest online ad categories and, as our network of real estate professionals has grown to nearly 100,000, we’ve proven that a straightforward way to market one’s self is essential. Professionals can reach buyers through local advertising yet the publishers lack of available systems has made it difficult to deliver the digital ad products that today’s professionals seek,” said Matthew Barba, Co-founder and CEO, Placester. “By delivering our technology to networks of local publishers like Hearst, publishers are able to offer the right ad products to the right people within a sophisticated portal. We’re thrilled to be working with the tremendously innovative Hearst team as they’ve been industry leaders in the transition to digital and the implementation of native advertising. For many publishers, we’re bringing their real estate sections into the 21st century, which provides them with new revenue opportunities.”

For publishers, Placester’s platform seamlessly transforms existing digital real estate sections, optimizing revenue via a single solution to manage consumer search, real estate inventory information and associated ad products. Hearst’s nationwide-network of local newspapers, such as The Connecticut Post, are the first to adopt Placester’s platform in place of legacy real estate sections. Through this partnership, Placester unlocked new advertising opportunities for Hearst’s existing and future advertisings.

“When we first invested in Placester, we all knew that the solution they were offering to real estate professionals at scale had important implications for other industry stakeholders like local media companies and hyperlocal publishers. These publishers have seen their real estate ad business cannibalized by emerging digital platforms in the last decade and seek a partner for real change. We love giving market players the technology to disrupt their own massive traditional industries. It’s exciting to be a further part of Placester’s growth as they bring their technology to publishers in addition to real estate agents,” said Krishna K. Gupta, Founder and General Partner, Romulus Capital.

With today’s investment, Placester has raised a total of $8M in total funding.

About Placester

Placester, the real estate advertising network, partners with leading publishers to quickly and effortlessly deliver secure digital ad products that today’s agents and brokers desire within a user experience that is optimized to increase consumer engagement and conversion.

By the Way…

I spoke with Seth by phone yesterday on this, and it should be pointed out that this newspaper-publisher-platform thing gets listing data either via direct relationship between the newspaper and the local MLS, or via the syndication feeds like ListHub. Placester’s broker/agent IDX website business is NOT a source for the data to the newspapers.

Thought I’d point that out, since some of y’all might flip out about that, as you did when Zillow bought Diverse Solutions.

The Local Angle

So why should anybody care that a startup raised money? Well, apart from friends happy for friends, like I am for Seth. But beyond that, why should we care?

The reason why the VC’s are putting more money into Placester isn’t because it makes cool agent websites. The reason is that the VC’s and Placester think that it can help the long-suffering local newspapers break the near-monopoly that the major real estate portals have on real estate classifieds.

Key graf:

Together with its website product for real estate agents, Placester is realizing its long-term vision of connecting local publishers to the world’s real estate professionals. These publishers have long been out of reach to most real estate professionals due to market fragmentation and antiquated advertising choices. For publishers, this represents a fresh opportunity to garner more of the enormous digital advertising investment made each year by real estate professionals, estimated to reach $14.5B by 2017.

So I chatted with Seth by phone yesterday in connection to this news. His view is that today, online real estate is completely dominated by the Big Three: Zillow, Trulia and REALTOR.com. Quite a bit of the economic value of those companies have been siphoned away from local newspapers that used to dominated real estate classified before the portals came along.

In fact, I remember clearly that when Zillow and Trulia first came to market, the big pitch they made to brokers and agents was that their advertising solutions were cheaper, faster, and better than local newspaper ads. Plus, the local newspaper websites of the time achieved levels of suckitude only seen in some MLS technology platforms (and some broker/agent websites of today).

Well, Placester’s thinking is that real estate is local, above all. They point to the large traffic that local newspapers still generate on their websites, but believe that the newspapers fail to monetize the traffic because their search/advertising solutions blow disease-ridden Dagestani goats. Placester proposes to replace those platforms with its own solution, and enable the local newspapers to attract advertising dollars from brokers and agents.

Seth made it clear that they are aiming directly at Zillow, Trulia, and Realtor.com with this white-label platform solution. Real estate is local, and real estate advertisers are also local.

Seems clever enough, no? I can buy that argument.

The Questions

Thing is, Zillow today powers the real estate search of hundreds of newspaper websites, and some thirty newspaper sites have deeper content integration with Zillow. This is a business Zillow’s been pursuing from the very start — the biggest win, of course, being the Yahoo-Zillow Real Estate network. But Zillow also powers sites like Frontdoor.com (HGTV’s entry into the space) and others.

I’ve never seen Spencer Rascoff talk about these newspaper partnerships on any earnings call. I could have missed a reference somewhere, I suppose, but I know I’ve never seen it. If the local traffic component were such a big deal, wouldn’t some Wall Street analyst somewhere have asked about that? Or Spencer bragged about it somewhere, sometime?

And Zillow isn’t the only game in town. Trulia has also been pursuing such “Powered by Trulia” partnerships from its humble beginnings as well. Again, radio silence from Pete Flint on any newspaper-based traffic or advertising results.

So while I’m thrilled for Placester, the open question of the day is whether the newspapers really are relevant in the 21st century of local classifieds. Lord knows the newspapers are trying to adapt and modernize, but it seems to me that so much of their classified base has migrated online, and increasingly, to mobile.

But if there’s a mobile app for CTHouseHunter.com, it isn’t anywhere near the top of the list in the AppStore. So just how relevant is this in an age where 70% of Zillow’s traffic comes from mobile, especially its top-of-the-charts mobile app? Again, same story for Trulia and REALTOR.com and even Redfin. Mobile apps dominate their traffic growth.

It seems to me that nothing but nothing is more local than mobile, even if the said mobile app is an international phenomenon. Think about Yelp. I have Yelp on my phone, and it’s about as local as it needs to be when I’m looking for a restaurant. Why would I need to download some Houston Chronicle Restaurant App when Yelp exists, and its gives me hyperlocal info based on my current location?

That feels like a race that the newspapers simply lost, because they never got in it in the first place.

Now, Placester might help the Hearsts and Knight-Ridders of the world win back the ground they’ve lost. But the big question to me is on whether in the age of mobile apps, the consumer truly can be won back by the local publishers, even and especially for real estate.

Full Circle?

In a way, we’ve come full circle. Zillow and Trulia grew by competing against the extraordinarily expensive newspaper advertising. Newspapers are now in a position to have to compete against Zillow and Trulia. I’d imagine they’d have to offer advertising solutions to local brokers and agents that are magnitudes less expensive than ZTR in order to attract interest. (Well, except from the diehard I Hate Zillowites in real estate, I suppose, but their numbers are dying out these days.)

I wish them luck, as I’m trying to imagine newspapers transitioning from its centuries-old model of “$X for Y ad for Z period of time” to the ZTR model of subscriptions and zip-code lead purchases and showcase listings. I suppose if anyone could help them, it’s savvy startup guys like Placester and Seth Price.

Something to Think About

Here’s what I’d be looking forward to seeing, and thinking about.

Suppose Placester wins widespread adoption by the major local papers. I hope they do. If those local papers then start beating the pants off of ZTR, because real estate truly is local, then how would that change your online strategy?

If on the other hand, if they don’t win, and despite their resources and local marketplace brand-name, the local newspapers get their butts handed to them on a plate by the top-mobile-app-having portals… then how would that change your thinking? Because if the f’ing Houston Chronicle can’t beat ZTR, then neither can you.

Anyhow… congratulations to Seth and the Placester team! Look forward to seeing how this new front in the battle for online dominance.

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.